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Lev
Lev, Tax Advisor
Category: Tax
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Can I deduct my mothers assisted care living expense, drs

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Can I deduct my mother's assisted care living expense, drs visits, perscriptions if she make over $3600.00 from her retirement paid in an annuity? I pay more than half of her living expenses. I pay all of the expenses to keep and manage her home as well. I tried to claim her as a dependant and my return was rejected.
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

LEV :

Hi and welcome to Just Answer!

LEV :

QUESTION #1: For tax purposes, is it true that -- even though these are Gold Eagles -- the valuation is based on the raw price of gold bullion at the time of distribution? In this example, the capital gain on the IRA account would be $112,891 - $66,964 = $45,926.65.


You can withdraw properties from your IRA penalty-free when you reach retirement age (age 59 1/2). For distribution purposes you can elect either to have the IRA sell the property or take an in-kind distribution of the property. The amount of distribution is a fair market value of distributed properties. In your example that would be $124,583. That value will be your basis if you sell the property after distribution.


There are no capital gains for properties sold inside the IRA. There are no capital gains if properties are not sold.


 


QUESTION #2: For 2011 tax purposes, can I subtract the entire loss of $17,930 from the gain of $45,926 and thereby pay taxes on $27,996? (It is true that some other miscellaneous income items affect the tax bracket, but generally it looks like about 25%).


If you made only pre-tax contributions into your IRA account – assuming traditional IRA - the total amount of distribution will be your taxable income. If you made after-tax contributions – that amount will be recovered tax free.


Whatever gain or loss you have inside your IRA account generally doesn’t affect your tax liability.


Your capital loss of $17,930 may be used to offset other capital gains. The taxable IRA distribution is not a capital gain. If you have net capital loss – you may use only up to $3000 to offset other taxable income in the current year and the rest will be carried forward to following years.

LEV :

Let me know if you need any help or clarification.

LEV :

Sorry - that information was posted by mistake. Please disregard.


 

Expert:  Lev replied 5 years ago.

Can I deduct my mother's assisted care living expense, drs visits, prescriptions if she make over $3600.00 from her retirement paid in an annuity? I pay more than half of her living expenses. I pay all of the expenses to keep and manage her home as well. I tried to claim her as a dependent and my return was rejected.
You may claim your mother as a dependent in 2010 if

-- her taxable income is less than $3650

-- you paid more than half of her expenses.

 

Regardless if you claim her as a dependent - you may claim medical expenses you paid for her if you provided over half of her support in 2010. These expenses are reported on the schedule A line 1 - www.irs.gov/pub/irs-pdf/f1040sa.pdf

You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution. This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care.

 

Sorry for incorrect posting. Let me know if you need any help or clarification.

 

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